SHANGHAI, Oct 20: Japanese Prime Minister Junichiro Koizumi and Singapore Prime Minister Goh Chok Tong agreed on a wide-ranging bilateral free trade agreement on Saturday, setting the stage for the pact to be signed by the end of the year.

This would be the first such (bilateral) pact for Japan and we would like to make it as a model for similar deals, Koizumi was quoted by a Japanese official as telling Goh.

Goh said he wanted the pact to be signed by the end of the year once the necessary legal procedures have been completed.

Singapore has already signed a bilateral market-opening deal with New Zealand and is either negotiating or exploring similar agreements with the United States, Australia, the European Free Trade Association, India and Mexico.

A staunch supporter of multilateral trade liberalisation, Japan has turned its attention to bilateral trade agreements somewhat reluctantly.

It decided to explore bilateral deals in order to keep up the momentum for free trade after ministers failed in Seattle in December 1999 to agree on the agenda for a new round of multilateral trade talks.

Singapore was an obvious choice as Japan’s first negotiating partner because it is has no agricultural exports to offend Japan’s politically powerful farm lobby.

If the results are beneficial, Japanese officials said they hope to apply the lessons learned to the negotiation of other bilateral pacts. South Korea and Mexico have been mentioned as possible candidates.

Under the pact endorsed on Saturday, all Japanese exports to Singapore would be free of tariffs.

For Singapore’s exports to Japan, the non-tariff portion would be raised to 94 per cent from 85 per cent. Some 98 per cent of industrial products from Singapore would be tariff-free.

Tariffs would remain for some petrochemical products, a crucial export item for Singapore, but those on industrial naphtha would be abolished over time.

Tariffs on crude oil will go immediately.

Japan is Singapore’s second-largest investor measured by cumulative fixed-asset investment and its third-largest trading partner.

The leaders met on the sidelines of a weekend summit of the 21-member Asia Pacific Economic Cooperation (APEC) grouping, the first major global gathering since the September 11, suicide hijack attacks on the United States that killed some 5,400 people.—Reuters